Economic Crisis and Austerity Policies Portugal Pilar Gonzlez - - PowerPoint PPT Presentation

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May 06, 2023 209 likes •338 views

The European Social Model in times of Economic Crisis and Austerity Policies Portugal Pilar Gonzlez Antnio Figueiredo Portuguese Social Model Historical context Recent realization and Context dependence A contemporary

SLIDE 1

The European Social Model in times of Economic Crisis and Austerity Policies Portugal

Pilar González António Figueiredo

SLIDE 2

Portuguese Social Model

 Historical context

 Recent realization and Context dependence

 A contemporary manifestation of 1974 revolution  1976 Constitution:

 simultaneously ended the unstable post Revolution period and started

democracy consolidation in Portugal

 very generous as far as social rights are concerned, being a complex mix of

social and political influences, strongly marked by the revolutionary social dynamics generated by the military cup

 EU accession in 1986

 Unbalanced: compromise between social policy achievements in

the last period of the autocratic regime and new developments generated by democratic aspirations and the influence of the integration into the EU

 An encompassing model

SLIDE 3

Portuguese Social Model

 Pillars

 Public education system  National health system  Social protection

 Combination of a contributive and a non-contributive (social) system

 Labour market regulation

SLIDE 4

To keep in mind

 Before 2008, Portugal was undergoing a process of

structural change:

 Adjustment of the productive specialisation profile to

reglobalisation and overvalued Euro

 Painful transition from a period of high employment creation in

non-skilled and low wage jobs towards more skilled jobs, matching progresses in secondary and tertiary education

 Need to stop or at least reverse the allocation of private and

public resources towards non-tradable sectors

SLIDE 5

Portuguese Social Model

 The reforms of the 2000s: targeted at combining equity

and efficiency

 Labour market regulation: important changes based on Social

Dialogue

 Social Security (namely pensions): important changes based on

Social Dialogue

 Education and Health: rationalising the system

 POSITIVELY EVALUATED BY OECD, IMF and

EUROPEAN COMMISSION

SLIDE 6

Crisis and MoU: some empirical evidence

Source: PORDATA Source: EUROSTAT

5 10 15 20

GDP growth rate and unemployment rate: 1999-2012

GDP growth rate, constant prices unemployment rate 25 27 29 31 33 35 37 39 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Gini coefficient of equivalised disposable income

European Union (15 countries) Portugal

SLIDE 7

Redistribution of income: income share

6 6.2 6.4 6.6 6.8 7 7.2 7.4 7.6 2004 2005 2006 2007 2008 2009 2010 2011 2012 Decile 1+2 30 35 40 45 50 55 2004 2005 2006 2007 2008 2009 2010 2011 2012 decile 3 to 8 decile9+10

Source: EUROSTAT

MoU: new dynamics of income distribution between groups

SLIDE 8

But also in absolute terms…

2009 2010 2011 2012 Decile 1 2,9% 5,5%

3,4%
2,6%

Decile 2 4,5% 4,9%

2,0%
0,3%

Decile 3 4,0% 3,4%

1,7%
1,1%

Decile 4 2,3% 3,4%

1,5%
1,8%

Decile 5 1,7% 4,8%

3,1%
1,0%

Decile 6 0,8% 6,0%

3,8%
1,4%

Decile 7 1,8% 4,6%

2,4%
2,5%

Decile 8

1,3%

2,3%

1,8%
1,5%

Decile 9

1,5%

3,0%

2,7%
1,7%

annual growth rate of the cut-off income, Portugal

SLIDE 9

But also in absolute terms…

 National Income decreased  It decreased differently in different income groups

2009 2010 2011 2012 Decile 1 2,9% 5,5%

3,4%
2,6%

Decile 2 4,5% 4,9%

2,0%
0,3%

Decile 3 4,0% 3,4%

1,7%
1,1%

Decile 4 2,3% 3,4%

1,5%
1,8%

Decile 5 1,7% 4,8%

3,1%
1,0%

Decile 6 0,8% 6,0%

3,8%
1,4%

Decile 7 1,8% 4,6%

2,4%
2,5%

Decile 8

1,3%

2,3%

1,8%
1,5%

Decile 9

1,5%

3,0%

2,7%
1,7%

annual growth rate of the cut-off income, Portugal

SLIDE 10

The shrinking of the middle class?

 Very unequal country  Income cuts (wages, social security benefits, pensions)  High unemployment even among the high qualified  Wage cuts of public sector workers: a main cause of

deterioration of the middle class

 Income cuts + weakened prestige

 Uncertainty and insecurity  Freezing careers  Political speech emphasizing a duality between the protected civil

servants and the others;

 Circle: deterioration of public careers; demotivation

 Increased homogeneity within income groups  Significant fall of upward social mobility

SLIDE 11

Main conclusions

 The Portuguese economy was under a strong structural

change before the crisis

 Austerity policies negatively extended the penalizing effects of

the financial international crisis

 Bail-out measures should not ignore the development stage of

the economy: dismantling the recent and vulnerable dimensions of the ESM in a context of strong demand for social protection had very high and not recoverable costs

 Fiscal consolidation of small euro-zone economy not feasible

without a solution for the euro zone as a whole

 Portugal faces the emergence of strong dynamic negative

effects